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Test Bank For Global Business Today, 8th Edition

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    1 - 1 Chapter 01 Globalization True / False Questions 1. As a result of globalization, we have been moving toward a world in which national economies are relatively self - contained entities. True False 2. By offering the same basic product worldwide, firms help to create a global market. True False 3. A company has to be the size of a multinational giant to facilitate, and benefit from, the globalization of markets. True False 4. As a result of globalization, companies rarely need to customize marketing strategies, product features, and operating practices in different countries. True False 5. Globalization has resulted in greater uniformity replacing diversity across national markets. True False 6. As firms follow each other around the world, they bring with them many of the assets that served them well in other national markets. Thus, greater diversity replaces uniformity. True False 7. Substantial impediments, such as barriers to foreign direct investment, make it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe. True False

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    1 - 2 8. The World Trade Organization, the International Monetary Fund and its sister institution the World Bank, and the United Nations were all created by voluntary agreement between individual nation - states. True False 9. The International Monetary Fund and the World Bank were both created in 1944 by 44 nations that met at Bretton Woods, New Hampshire. True False 10. The WTO is seen as the lender of last resort to nation - states whose economies are in turmoil and whose currencies are losing value against those of other nations. True False 11. The IMF is less controversial than its sister institution, the World Bank. True False 12. In return for loans, the IMF requires nation - states to adopt specific economic policies aimed at returning their troubled economies to stability and growth. True False 13. Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country. True False 14. After World War II, the advanced nations of the West committed themselves to increasing barriers to the free flow of goods, services, and capital between nations. True False 15. The Uruguay Round, held under the umbrella of GATT, extended GATT to cover services as well as manufactured goods. True False 16. The lowering of trade and investment barriers allows firms to base production at the optimal location for that activity. True False 17. As a result of international trade, the economies of the world’s nation - states are becoming less intertwined. True False

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    1 - 3 18. The globalization of markets and production and the resulting growth of world trade, foreign direct investment, and imports all imply that firms are finding it easier to protect themselves from the attack of foreign competitors. True False 19. Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances. True False 20. While advances in telecommunications are creating a global audience, advances in transportation are creating a global village. True False 21. The real costs of information processing and communication have fallen dramatically in the past two decades. True False 22. The Internet has been a major force facilitating international trade in services. True False 23. Countries that markedly increased their share of world output from 1960 to 2010 included Germany, France, and the United Kingdom. True False 24. The United States accounted for a significantly larger share of the world economy in 2011 than it did in the 1960's. True False 25. Beginning in the 1970s, European and Japanese firms began to shift labor - intensive manufacturing operations from developing nations to their home countries where labor costs were lower. True False 26. The stock of foreign direct investment refers to the total cumulative value of foreign investments in a country. True False

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    1 - 4 27. Throughout the 1990s, the amount of investment directed at both developed and developing nations increased dramatically True False 28. Among developing nations, the largest recipient of foreign direct investment has been China. True False 29. Although most international trade and investment is still conducted by large firms, many medium - size and small businesses are becoming increasingly involved in international trade and investment. True False 30. The rise of the Internet is increasing the barriers that small firms face in building international sales. True False 31. Many of the former Communist nations of Europe and Asia seem to share a commitment to democratic policies and free market economies. True False 32. In the past quarter century, the volume of cross - border trade and investment has been growing less rapidly than global output. True False 33. One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and western Europe. True False 34. It is possible that economic growth in developed nations has offset the fall in the share of national income enjoyed by unskilled workers, raising their living standards. True False 35. One concern of globalization opponents is that it undermines the influence of supranational organizations and promotes the sovereignty of individual nation - states. True False 36. In general, as countries get richer, they enact tougher environmental and labor regulations. True False

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    1 - 5 37. Highly indebted poor countries (HIPCs) can bootstrap themselves out of poverty by pursuing retaliatory trade policies rather than free trade policies. True False 38. A firm has to become a multinational enterprise, investing directly in operations in other countries, to engage in international business. True False 39. Despite all the talk about the emerging global village, differences between countries such as cultures and political systems are very profound and enduring. True False 40. Differences among countries require that an international business vary its practices country by country. True False Multiple Choice Questions 41. Which of the following has reduced as a result of globalization? A. Volume of goods and services crossing national borders B. Foreign exchange transaction C. Procuring product inputs from all over the world D. Differences in material culture between national economies E. Deregulation of markets 42. _____ refers to the shift toward a more integrated and interdependent world economy. A. Forward integration B. Mass customization C. Globalization D. Commercialization E. Vertical integration

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    1 - 6 43. Which of the following statements is true regarding the globalization of markets? A. As a result of the globalization of markets, tastes and preferences of consumers in different nations are beginning to differ more. B. By offering the same basic product worldwide, firms fail to create a global market. C. There still exist significant differences among national markets along many relevant dimensions, including distribution channels, culturally embedded value systems, and legal regulations. D. The most global of markets are not typically markets for industrial goods and materials, but markets for consumer products. E. A company has to be the size of a multinational giant, such as Citigroup or Coca - Cola, to facilitate, and benefit from, the globalization of markets. 44. Automobile companies promote different car models in different countries depending on a range of factors such as demographics, local taste, local fuel costs, income levels, traffic congestion, and cultural values. This most likely demonstrates that: A. significant differences still exist among national markets. B. cultural diversity has been replaced by global uniformity. C. the global market is less complex than national markets. D. a company does not have to be the size of a multinational giant to facilitate, and benefit from, the globalization of markets. E. the social norms in a country do not affect purchase decisions of consumers. 45. Which of the following is most likely to be the best suited product for a global market? A. Microprocessors B. Fast food like hamburgers C. Clothes and accessories D. Bank and other personal services E. Household furnishings

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    1 - 7 46. Which of the following statements best supports the claim that greater uniformity replaces diversity in the context of global markets? A. Differences in business systems and legal regulations, lead companies to customize their marketing strategies, product features, and operating practices to best match conditions in a particular country. B. As rival global firms follow each other across countries, they bring with them their brand names, products, and marketing strategies from other national markets, thus creating homogeneity across markets. C. Truly innovative companies succeed by developing products that serve specific needs of the local markets. D. The volume of goods, services, and investment crossing national borders has expanded at a slower rate than world output for more than half a century. E. The most global of markets are not typically markets for consumer products as significant differences in consumer tastes and preferences still exist among national markets. 47. Globalization results in a greater degree of _____ across markets than would be present otherwise. A. regulatory control B. diversity C. homogeneity D. administrative barrier E. communism 48. The _____ refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors such as labor, energy, land, and capital. A. globalization of markets B. augmentation of products C. amplification of production D. globalization of production E. capitalization of markets

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    1 - 8 49. Which of the following best illustrates the globalization of production? A. Daily Diamonds Inc. buys diamonds from South Africa and exports them to India for the cutting process. B. Evan Swan, a U.S. based fashion designer, is planning to open a flagship store in China to serve the Asian market. C. Uncle Crab, a UK fast food chain, has been serving customers worldwide through its franchises. D. Silver Unicorn Inc. uses sales personnel from the respective host country to sell its products and services. E. Pizza Gallery, an Italian pizza chain, customizes its pizzas and pastas to suit the tastes of its American and Australian customers. 50. West Electronic Corporation sources goods and services for its electronics products from different locations around the globe in an attempt to take advantage of differences in the cost and quality of labor and land. This practice demonstrates the: A. globalization of production. B. localization of markets. C. increasing differences in tastes and preferences of consumers across the world. D. nationalization of private enterprises. E. rise of communism throughout the globe. 51. Which of the following statements is most likely to be true of outsourcing? A. Dispersing value - creation activities through outsourcing tends to increase the costs requires to develop a product offering. B. In today's world, outsourcing efforts are primarily confined to manufacturing activities, and do not include service activities. C. Outsourcing production to foreign countries increases the chance for companies to gain significant orders for their products from those countries. D. Outsourcing always increases the time required to develop a product, and allows no manufacturing flexibility. E. A multinational company cannot customize its products for local markets of different countries if it outsources its production activities.

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    1 - 9 52. A software company uses engineers in India to perform maintenance functions on software designed in the United States, and it also uses Indian accountants to compile tax returns. According to this information, the U.S. based company is most likely using: A. outsourcing. B. job sharing. C. job rotation. D. franchising. E. apprenticeship. 53. Early outsourcing efforts were primarily confined to _____. A. accounting activities B. manufacturing activities C. healthcare services D. educational activities E. consulting services 54. Which of the following reasons has made outsourcing of service activities to low - cost producers in other nations possible? A. Increasing diversity in material culture among national markets B. Government regulations limiting certain service activities in the home country C. Increasing foreign competition in manufacturing industries D. Rise in communism globally E. Use of modern communications technology 55. _____ is an international treaty that committed signatories to lowering barriers to the free flow of goods across national borders and is the predecessor to the World Trade Organization. A. North American Free Trade Agreement B. Commonwealth of Independent States Free Trade Agreement C. Kyoto protocol D. General Agreement on Tariffs and Trade E. Agreement on Trade - Related Aspects of Intellectual Property Rights

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    1 - 10 56. The globalization of production mainly occurs due to the: A. growing cultural homogeneity across markets. B. increasing differences in the tastes and preferences of consumers in different nations. C. national differences in the cost and quality of factors such as labor, energy, land, and capital. D. rise in communism the world over. E. increasing worldwide demand for unskilled workers. 57. The World Bank was primarily created in 1944 to: A. preserve peace through international cooperation and collective security. B. promote economic development. C. render judgments on disputes submitted to it by member states. D. furnish advisory opinions on questions referred to it by authorized bodies. E. promote respect for human rights. 58. In 1944, the IMF was established to: A. maintain order in the international monetary system. B. preserve peace through international cooperation and collective security. C. promote respect for human rights. D. control the fossil - fuel emissions of the member states by imposing monetary fines. E. formulate a coordinated policy response to financial crises in developing nations. 59. Which of the following is an argument put forth by critics of the IMF? A. It increases barriers to the free flow of goods and investment across national borders. B. It only provides assistance to developing nations and completely ignores the developed nations. C. It is not powerful enough to ensure that the nation - states adhere to the rules laid down in trade treaties. D. It promotes the rise of communism across the globe. E. It usurps the sovereignty of nation - states by telling governments what economic policies they must adopt.

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    1 - 11 60. The _____ was established in 1945 by 51 countries committed to preserving peace through international cooperation and collective security. A. Greenpeace organization B. Amnesty International C. League of Nations D. United Nations E. G - 20 61. The _____ is the less controversial sister institution of the IMF which was created along with the IMF in 1944. A. G - 20 B. International Court of Justice C. League of Nations D. World Trade Organization E. World Bank 62. According to the UN Charter, one of the four purposes of the UN is to: A. be a center for harmonizing the actions of nations. B. encourage member - nations to increase trade barriers. C. provide interest - free loans to poor countries to implement infrastructure projects. D. promote the creation of regional free trade agreements. E. spread communism worldwide. 63. The G20 comprises the _____ of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank. A. finance ministers and central bank governors B. presidents and defense ministers C. prime ministers and army chiefs D. international trade ministers E. ministers of foreign affairs

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    1 - 12 64. The _____ was originally established in 1999 to formulate a coordinated policy response to financial crises in developing nations. A. United Nations B. G - 20 C. World Trade Organization D. International Court of Justice E. World Bank 65. In 2008 - 09, the G20 primarily worked to: A. address the concerns for human rights in sweatshops. B. formulate policies to counter hunger and poverty in underdeveloped nations of the world. C. provide a forum to launch a coordinated policy response to the global financial crisis. D. help create a unified action plan to counter the threat of global terrorism. E. render judgments on patent disputes submitted to it by member - states. 66. Which of the following is a macro factor underlying the trend toward greater globalization? A. Rise of communism across the globe B. Increasing nationalization of private organization C. Increasing diversity in the tastes and preferences of consumers in different nations D. Increasing trade regulations across the globe E. Dramatic developments in recent years in information processing and other technologies 67. Which of the following best exemplifies foreign direct investment (FDI)? A. Pure Pearls, a jewelry store in the U.S., imports harvested pearls from Indonesia, Philippines, and Australia. B. Chivalry, a U.S. based phone manufacturing company, has set up its own assembly plant in Japan to cater to the needs of the Asian market. C. Delicate Love, a reputed florist company in Holland, exports tulips and roses throughout the globe. D. Samantha started an Italian restaurant in her home country, the United States, after she took cooking lessons from a reputed chef in Italy. E. Yin and Yang Inc., a Chinese firm, supplies buttons and zips to major denim brands in the UK.

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    1 - 13 68. Michelle, an Italian fashion designer, sells her merchandise by exporting them to the U.S., UK, and Brazil. According to this information, Michelle is most likely involved in: A. foreign direct investment. B. foreign institutional investment. C. international trade. D. cross - border bartering. E. outsourcing. 69. If in the present time, an International company decides to do business with the former Communist nations of Europe and Asia it would most likely benefit from the: A. host of export and investment opportunities presented by these countries. B. low business risks involved in doing business with these countries. C. authoritarian governments of these nations. D. highly developed economies of these countries. E. highly stable political and economic conditions in these countries. 70. For foreign direct investment (FDI) to occur, a firm should primarily: A. conduct cross - border bartering with neighboring countries. B. invest resources in business activities outside its home country. C. export goods or services to consumers in another country. D. import goods or services from producers in another country. E. erect formidable barriers to international trade. 71. Gem Globe, an American company, has invested substantial capital in precious stones mining activities outside the United States. This practice is referred to as: A. unrelated diversification. B. foreign direct investment. C. cross - border bartering. D. organizational divestment. E. international cartel.

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    1 - 14 72. When a firm invests resources in business activities outside its home country, it is referred to as: A. foreign exchange. B. foreign divestiture. C. speculative investment. D. foreign direct investment. E. cross - border cartel. 73. The motive behind the high tariffs imposed by nations on imports of manufactured goods, prior to World War II, was to: A. deter any possible attempts to promote communism. B. protect domestic industries from foreign competition. C. prevent the occurrence of the Great Depression. D. safeguard patents, copyrights, and trademarks. E. promote the trade of services over the trade of manufactured goods. 74. The advanced industrial nations of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations. This goal was enshrined in the: A. Inter - American Treaty of Reciprocal Assistance. B. Comprehensive Economic Partnership Agreement. C. General Agreement on Tariffs and Trade. D. North American Free Trade Agreement. E. United Nations charter. 75. Which of the following reasons contributed to the Great Depression of the 1930s? A. Inability to meet the increasing world demand for products B. Several countries accepting General Agreement on Tariffs and Trade C. Increasing attack from foreign competitors on domestic industries D. Privatization of state - owned organizations E. Countries progressively raising trade barriers against each other

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    1 - 15 76. Which of the following organizations was established at the 1993 Uruguay Round? A. World Trade Organization B. International Court of Justice C. International Trade Enforcement Agency D. United Nations E. World Bank 77. The 1993 Uruguay Round: A. increased the trade and investment barriers. B. excluded the trade of services from international trade. C. transformed the World Trade Organization into the GATT. D. provided enhanced protection for patents, trademarks, and copyrights. E. promoted the worldwide rise of communism. 78. Which of the following is a part of the agenda of the Doha Round of talks launched by the WTO? A. Limiting the use of antidumping laws B. Abolishing the International Monetary Fund C. Increasing tariffs on industrial goods, services, and agricultural products D. Persuading member governments to cut defense spending E. Establishing GATT as a replacement for the WTO 79. Which of the following would be the biggest gain for the world's poor nations from the 2001 Doha WTO talks? A. Gain from increasing barriers to cross - border investment B. Gain from reduced agricultural tariffs and subsidies C. Gain from expanding the use of antidumping laws D. Gain from the promotion of communism across the globe E. Gain from increased protectionism in the markets of the developed world 80. The lowering of trade and investment barriers: A. protects domestic industries from foreign competition. B. was not an agenda of the Uruguay Round. C. allows firms to base production at optimal locations outside their home country. D. creates an unfavorable environment for FDI. E. caused the Great depression of the 1930s.

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